About Half of DirecTV Now Subs Come from Competing MVPDs, AT&T Says

Along with luring cord cutters and cord nevers, AT&T's DirecTV Now over-the-top service also is helping it snag customers from rival MVPDs, which make up about half its customer base, Chief Financial Officer John Stephens told investors Tuesday. AT&T said DirecTV Now subscribers surpassed 1 million. The company is beta testing its second-generation platform that will include a cloud DVR and 4K capabilities, pay-per-view events and movies, digital advertising inserts and data insight capabilities, Stephens said. He said DirecTV Now profitability "will get up into very acceptable levels," and though it isn't the same fat profit margin opportunity the traditional linear TV business was, it requires much lower capital expenditures. On FirstNet, any states that don't make a choice automatically will be opted in when the opt-in window closes this month, and many states may go that route, he said. He said the work orders to build the FirstNet network over the next five years will start to be issued in January, with the engineering work already complete. He said FirstNet is "a very good revenue opportunity for us," with the potential of new products and services targeting markets like first responders and smart city initiatives, targeting perhaps 10 million users. Stephens said the company expects to finish this year with 7 million homes passed with fiber, and instead of an earlier prediction of 12.5 million by mid-2019, it's on track to pass more than 14 million homes with fiber by then. Stephens said customers should see "no change" from a rollback of Communications Act Title II regulation of ISPs, with the company continuing its policies of no blocking or advantaging some websites over others. House Communications Subcommittee ranking member Mike Doyle,​ D-Pa., and Chairman Ajit Pai were at odds Tuesday about the likely ramifications of Pai's net neutrality proposal (see 1712050057). Clarity on net neutrality "will bring back an opportunity for more investment," Stephens said. He said the company "look[s] forward to trial" and prevailing in the DOJ lawsuit seeking to block its buy of Time Warner (see 1711200064).